Innovative loans could turn the tide

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Six months on from its launch, the Funding for Lending Scheme is now in full swing and with competition in the market increasing, the time for innovation is ripe.

Cambridge Building Society launched a select scheme which offers 21 brokers access to an exclusive three-year fixed rate mortgage at 5.59 per cent up to 95 per cent LTV.

Whether the reason behind this exclusive access is to reward loyalty, or to simply pilot a bigger scheme, is yet to be seen.

However, products like this, with their LTV at the riskier end of the scale, are encouraging to see. If it does well, Cambridge’s offering could encourage others to offer similar, higher LTV products.

Another recently launched product is Clydesdale Bank’s low-start mortgage. This product, which can be used for up to 80 per cent LTV loans, offers interest-only repayments for the first three years. After this, you have the option of switching to a repayment mortgage with Clydesdale Bank or remortgaging with another provider.

Looking across the market, innovation is currently focused around small scale, niche products. There has been considerable growth in the number of specialist mortgage. For example, Aldermore Commercial has recently launched a range of competitive products for complex buy-to-lets.

It seems as though the tide could finally be turning on innovation in the mortgage market. Let’s hope that these small scale products lead the way for high LTV mortgages across the spectrum to really allow those first time buyers onto the ladder.